So you just lost your first real estate bid. It’s amazing how personal it feels, right? I mean, you’re super cool and you made a good offer; how could the sellers have chosen another bid over yours? The Boston real estate market is very competitive. Driven by high demand, low inventory and a good economy…housing is a scarcity and you’re going to have to fight for it. However, no matter if this is your first foray into the real estate market, or if you’re a seasoned veteran…relax, research and regroup.
First things first. Get a little space from the transaction.
Two words that don’t go well together are, emotional and investment. I recommend you go have a beer (or herbal tea) with friends or loved ones and blow off some steam. I know the feeling of house heartbreak. I’ve had it myself. Just remember, there will always be another great house. You just have to be patient sometimes.
Don’t blame your real estate buyer’s agent…yet.
Now that you’ve seen the big show, it’s time to get serious and examine the facts. Are you a “ready, willing and able” buyer? In other words, lay all your cards out on the table and look at them objectively. Are you truly prepared to act in the competitive real estate marketplace you are making bids in?
You’re going to need some data for this. Your agent should be more than willing to help – or may have already done so. Ask your agent for their opinion of why you lost out and what you could do better. Pay attention! Write stuff down! Ask him to send you any data points he thinks are relevant. (You should have a comparative market analysis that your agent prepared for you before making a bid. If he didn’t produce documentation to substantiate that opinion, he didn’t do his job.) Here are some questions you should be asking:
- How many bids did the property receive?
- What were the price, and terms of the winning bid? (Sometimes an agent can find this out – not always.)
- Was this particular sale indicative of what is happening in the the market as a whole (regionally)?
- What is the % over, or under the listing price that homes are selling for in the last 6 months within .5 mile of the subject property?
- What “terms” did the competition employ? No mortgage contingency? Did they have an inspection?
- Is there a market trend that your agent has identified and can substantiate? For instance, is the real estate market ascending faster than your budget allows?
Examine your strategy.
- Are you looking at homes that are already at the top of your budget, and competing at 5-10% over the asking price is out of the question?
- Are you submitting all the documents that were requested?
- Is your agent crafting an attractive, professional offer? Is it neatly typed or hand scribbled?
- Are you including a letter of introduction?
- Could you put down a larger deposit?
- Should you consider going without a contingency or two?
- Could you offer earlier or later in the process? (In regard to a deadline.)
- Did your agent ask the seller’s agent if there were any terms or conditions that might be attractive to the seller?
- Are you ( or your agent as your proxy) being annoying? (Asking for showings outside of set times, asking for documents that aren’t required yet, etc?)
Regroup and roll out a new strategy.
- First, craft a perfect offer. It should be typed neatly on documents that are common and recognized to the agents in the area. If it seems “alien” in any way it will be viewed suspiciously.
- Make sure there are no misspellings, and that it is clean and clear to read.
- Ensure all necessary documents are there, including any that the listing agent may have requested like a Lead Paint Notification Certification or a Seller’s Property Information Statement.
- Include a current pre qualification letter that is at or above the listing price.
- An offer with less contingencies is more attractive, and more valuable to the seller.
- Write a letter to the seller. Don’t make it smarmy. Just tell them who you are, what you do, maybe an interesting comment that establishes a connection and a charming photo. This humanizes your offer so you’re not just another piece of paper to the seller.
- Try increasing the earnest money deposit that accompanies the offer to an amount that is more than what is typical in your area. This will serve as a differentiator and help you stand out more and show you’re very serious.
- Try very hard to be the first one to see a property when it hits the market. See if your agent can preview properties that you really connect with. Can he bring you to the broker open house? Can you piggy back off another showing? This may give you more time to get your ducks in a row if you want to make an offer.
- If you insist on having an inspection, will the seller allow a “pre-inspection”? That is, an inspection before making an offer, or at least a walk-through with a contractor. Be careful, this may come across as annoying depending on the circumstances.
- Try and keep your offer dates as tight and quick as possible – but be flexible on your closing date. Does the seller need to do a lease back so they can buy another home? Offering this sort of flexibility is HUGE.
If you are repeatedly missing the mark, you really need to sharpen your pencil and figure out what the problem is. Searching for, offering on, and losing multiple bids will take a toll on everyone involved. It’s not sustainable.
Is your agent giving you the support you deserve? Here are some questions to ask yourself to determine if you have a good team:
- Is your agent generally responding to you expeditiously? No one is perfect, and he may have other clients too – but in most cases, an agent should respond within a few hours or they may be too busy for you.
- How familiar is your agent with the neighborhood? Does he know the agents there, and have a good relationship with them? Do they respond in a friendly and collaborative way to him? Has he spent enough time there to really know the community?
- Do you get regular updates from him about progress and strategy?
- Does he send you regular updates and keep you aware of new properties immediately and/or does he respond quickly with more information when presented with a property you are interested in?
- Does your agent know what development and community news may be affecting your purchase?
- Your agent should prepare a comparative market analysis (valuation estimate) for every property you want to make a bid on (or two if you’re comparing)?
Don’t be too quick to throw the baby out with the bath water. Your agent may be doing everything possible to be successful…sometimes it’s just bad luck or an overheated market. Give credit where credit is due, but also be aware if you need to make a team change. It’s not the end of the world. Just be transparent and honest. Keep in mind, if your agent is telling you that you aren’t competitive and something needs to change in order to be successful – you may want to listen. If you’re routinely getting out bid, you either need to lower your standards, raise your budget or consider a different location. Tough love kids, tough love.